 holding that a best judgment assessment under Section 63 CGST cannot be invoked against a registered taxpayer.){kind=link}
The Madras High Court, in C. Ganesan v. State Tax Officer (FAC), has reiterated an important principle governing best judgment assessments under the GST regime. The Court held that proceedings under Section 63 of the GST Act cannot be initiated against a person who is already a registered taxpayer and has filed GST returns. Accordingly, the assessment order was set aside while preserving the department’s liberty to proceed under the appropriate statutory provisions.
In the present case, the petitioner challenged an assessment order dated 29 December 2025 passed under Section 63 of the applicable GST statutes for the tax period 2018-19. The principal contention was that the petitioner was a registered person under GST, making Section 63 inapplicable. The State, while defending the matter, requested liberty to initiate fresh proceedings under Section 73 or Section 74, if warranted.
The High Court examined the records and found that the petitioner was indeed a registered taxpayer. Since Section 63 is intended for best judgment assessment of certain unregistered persons or persons whose registration has been cancelled, the respondent had invoked an incorrect statutory provision. Consequently, the Court quashed the impugned order and granted liberty to the department to initiate proceedings under the appropriate provisions of law, namely Section 73 or Section 74, wherever applicable.
This decision reinforces the importance of jurisdictional compliance in GST assessments. Authorities must invoke the correct statutory provision depending upon the status of the taxpayer. An assessment initiated under an inapplicable provision is liable to be set aside even though the department may subsequently proceed under the proper legal framework.
For taxpayers and GST practitioners, the judgment highlights the significance of verifying the statutory basis of every notice and assessment order. A defect relating to the very jurisdiction or applicability of the provision cannot be overlooked merely because tax liability may otherwise exist.